Identity theft is the one of the most common consumer crimes in America, affecting over 15 million people a year. A CNBC report revealed that identity theft causes consumers over $16 billion in damages a year.

It’s easy to overlook the threat of identity theft when you’re unaffected, but the “it won’t happen to me” mentality can lead to a dangerous and costly mistake. In reality, many people are affected by identity theft even when they are taking the necessary precautions.

Whether you are the victim of a phishing scam, data breach, or mere bad luck, there are many ways sensitive personal information can be compromised without any fault of your own. Consider these identity theft cautionary tales, not because you should live in fear, but to understand the magnitude of identity theft on the everyday consumer and how to prevent it.

Arby’s

The popular fast-food restaurant made headlines after experiencing a major data breach early last year which compromised over 300,000 individual’s credit and debit card information. Cash registers at corporately-owned Arby’s were infected with a malware virus which saved customer financial information after every purchase. That sensitive information went to remote hackers.

Gmail

Gmail, which has over one billion active users, recently fell victim to a phishing scam. Phishing is a common security breach in which people are tricked into releasing sensitive information. This type of crime comes in many forms, but most commonly, and in the case of Gmail, phishers will disguise themselves as reputable sources and request personal information from unsuspecting individuals.

In spring 2017, Gmail scammers requested Drive access under the guise of a trusted contact and then stole victims’ identities. After only an hour of criminal activity, Gmail put a swift end to the phishing scam, but only after around one million users were already affected.

Uber

Uber is the most popular ride-sharing app in 108 countries, but that does not mean it is immune to fraud. Late last year Uber revealed they experienced a breach that may have compromised 57 million users and drivers.

Hackers reportedly broke into the Uber’s Github portal — a program engineers use to collaborate on code — and stole consumer data that was stored there. Famously, Uber paid the hackers $100,000 to keep the breach secret. After the incident was leaked the company received severe consumer backlash for the breach and attempted cover-up.

How to protect your identity

So, what does this all amount to? Should we all just relent to identity thieves? Well, not exactly, but that is what the crooks want you to think. In reality, there are plenty of proactive measures you can take to protect your identity, many of which begin with your credit report.

Your FICO score is a history of all spending done under your name, whether legitimate or not. Keep an eye on your credit report and be on the lookout for any unusual activity such as unfamiliar inquiries or new accounts. If you see a surprising and significant change in your score then you might be a victim of identity theft.

In the wake of a year marked by identity theft, consider professional credit repair. Lexington Law is backed by over 20 years of consumer service and stands as a leader in the credit repair industry. If your credit report is bogged down by false or misleading report items, contact Lexington Law today.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

The popular misconception that investment income is reserved for the financially elite is simply not true. Even in spite of moderate debt, middle-class families stand to compound paycheck income through investing.

Putting money in investments while still making debt payments can feel like whack-a-mole, but diligence to a strict budget and picking the right financial holdings may help you see significant return.

The psychological return of investing

The tedium of paying down debt can give even the most resolute consumer tunnel vision. Debt payment after debt payment can wear you down, and getting right-side up can feel insurmountable. Investments can help you feel a sense of agency, and smart holdings can put a little extra cash in your pockets — a welcome change from the usual debt cycle.

Putting money in investments is a break from the tedium of regular debt payments. Not only will investing help you feel in control of your money but, if done correctly, returns can actually help you eventually pay off that intimidating debt.

Playing the numbers game

The first step to deciding whether or not to invest is to compare projected portfolio return rate vs. debt APR. This comparison helps to assess whether or not investing is realistic in the first place. Crunch the numbers to find out if investments offer a return significant enough to warrant the effort.

For example, if your loan has a 6 percent APR, but you know of an investment that will likely return 8 percent in interest payments, you would make up your loan APR and then some. By putting debt payment toward investments first it is possible to make money while still paying down debt.

Improve interest rates through credit repair

This might sound great in theory, but what can you do if debt APR is too high? Is there a way to reduce interest payments on loans in order to make investing a viable possibility?

High interest rates are basically a way for lenders to make up for the risk of loaning money. Because lenders run the risk of not being repaid, they are compensated for this risk through interest. Logically, if you can prove you are a less risky borrower, you may garner a lower interest rate, which is one reason your credit score is important.

Lenders assess the likelihood an individual will default on a loan through credit score. A credit score is simply proof of your ability to repay a loan. If high loan interest payments are getting in the way of investing you might consider repairing bad credit.

If your credit score is bogged down by identity theft or misleading credit items, a credit repair company can help repair bad credit. Lexington Law offers clients unparalleled credit expertise to help them get their credit score back on track. Over the past year, Lexington Law clients have seen a total of 9,000,000 negative items removed from their credit reports.

Some of those same people were likely thrilled to learn about balance transfers, or transferring the debt from one credit card to another credit card. This is done by opening a new credit card and informing the issuers of that card that you intend to transfer your previous balance. Usually these cards are attractive to people because they promise a lower interest rate for a certain period of time. However, be warned: transferring your balance is not the same as paying off your card. You are still liable for the entire balance, regardless of which credit card you are using.

While this arrangement might seem like a no-brainer, there are several factors to consider before applying for a balance transfer card.

Current credit score

Your credit score has an impact on every financial aspect of your life and could even affect your ability to gain employment as more and more employers utilize credit checks to determine how reliable you are as a person.

If you have a decent credit score, and you apply for a new credit card, you’ll likely get all the credit you need, or at least most of it. For example, if you have $8,000 of debt to transfer, and you have good credit, you will likely get approved for an $8,000 limit provided your debt-to-income ratio isn’t too high.

However, if you’re unable to get approved for the total amount you need, you may be doubling your problems by only transferring a portion of your credit card debt. While you might end up paying less in fees and interest on the original card, having two credit card payments where you used to have just one can be stressful for some.

Debt-to-income ratio

With that in mind, another factor that comes into play when applying for a credit card is your income compared with how much debt you already have. Most lenders or credit card companies want you to spend less than 40% of your monthly income on debt repayment, including your mortgage, car loan, any personal loans you may have, and credit card debt. (In reality, this number should be much lower in order to really stay on track with your spending, saving, and credit repair or maintenance.)

One of the most important things to consider is whether or not you can afford to make the monthly payments necessary to pay off your balance before the end of the introductory period. Not doing so can wreak havoc on your finances.

Not paying off your balance within the introductory period

If you do wind up being approved for the amount you need, you’ll want to consider the introductory period. Whether the initial interest rate is zero percent or as much as five percent, it’s wise to calculate how much you can afford to pay monthly, and if you can accomplish paying off this debt within the allotted time period.

If you can’t, things can get complicated and expensive very quickly. While credit card agreements can vary, it’s important to read them thoroughly. Many balance transfers restrict balance payment to the introductory period, so you may be liable for interest for the entire amount of the transfer, and not just the remaining balance.

Fees

Nothing comes for free, and that’s especially true of credit cards. While a low interest rate may draw you in initially, the fees associated could be the difference between paying off your credit card on time, or getting further into debt. When doing research on the best balance transfer card for you, always check the fees and ensure you can afford them. Be on the lookout for annual fees, introductory fees, balances transfer fees, and more. These can add up to hundreds of dollars, and may not be worth paying in the long run, especially if you’re only transferring a small balance (under $1,000).

It would be a shame not to be able to pay off your balance transfer on time because of fees, resulting in a chargeback of interest. Reading the fine print on any credit card agreement can save you thousands.

When not to transfer your balance

Balances transfers are designed for those with good credit who simply wish to pay off their debts with a lower interest rates. Using a balance transfer to help you avoid sinking into worse debt isn’t worth it, according to experts. The best thing to do in this type of situation is to work hard to pay down your existing debt as much as possible before exploring the idea of opening new lines of credit.

Additionally, if you have poor credit, you may not qualify for a balance transfer to begin with. In these cases, a personal loan or debt consolidation loan might be a better choice for your financial situation and lifestyle.

Things to remember

At the end of the day, if you do sign up for a balance transfer, you’ll want to do the following first:

Calculate how much you can afford to pay monthly

Check your credit

Research the card that best suits your needs

Pay it off as quickly as possible

A balance transfer does tend to have an affect on your credit score, but it all depends heavily on your current credit situation. To find out if a balance transfer could benefit your credit, contact Lexington Law at 844-259-3482.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

If you are currently working to establish good credit, or perhaps actively trying to fix your credit, it is important to consider how any sort of action you take financially may impact those efforts. Our entire financial history is interconnected, and the consequences are not always direct or obvious.

For example, banks do not report information regarding consumer checking accounts to the credit bureaus. It is reasonable to assume that closing your checking account should not impact your credit score, right? Not exactly.

What happens when you close a checking account?

Banks do not report checking account activity to the credit bureaus, if your account is in good standing. Alternatively, closing it to transfer to a different bank or opening a joint account does not impact your credit score or history.

However, what if your checking account is not in good standing? What if there is a negative balance due to overdrafts and you close the account and walk away? Many consumers do so each year, assuming that their actions will not catch up with them. It is not that simple, though.

While your bank does not report bank account information directly to the credit bureaus, there is a service that consumer banks rely upon, which is similar to how creditors report to the credit reporting agencies. This service is called ChexSystems. If you close a checking account with a negative balance still outstanding, that information may be reported to ChexSystems.

If the balance remains outstanding long enough, banks may send your account to a collection agency, and they do report to the credit bureaus. In other words, that counts as two strikes against you.

What is ChexSystems and what do they do?

According to Bankrate, ChexSystems was created by banks and credit unions to help identify people who are not reliable to open accounts. This process applies people who abuse checking accounts, overdraw their accounts and then close them, or have multiple overdraws on accounts.

While banks will not report checking account information to any credit bureau, they may report to ChexSystems. The bank may report this information to ChexSystems if your account was closed with an outstanding overdraft balance, if you have a history of multiple overdrafts, if you were deemed to be abusing your account or ATM access, or if the bank suspects of any kind of fraud.

This type of activity can make it difficult for you to open other accounts because other banks refer to the ChexSystems record before approving any new account. ”If your name is reported to ChexSystems, you can expect to have that infraction on your history for up to five years. If you have more than one report on your name in the system, you will likely be unable to do any regular banking.”

Opening and closing accounts too often can be reported to ChexSystems. Banks may assume you will abuse the accounts if you repeatedly open and close them.

What is the impact of overdraft protection?

Another surprising way that your checking account may impact your credit report is via overdraft protection.

Banks often market overdraft protection as a perk because it offers a kind of “safety net.” Overdraft protection may be especially helpful if you make a mistake or run into a timing issue that causes you to overdraft your account unexpectedly. When the bank applies overdraft protection to your checking account, they are agreeing to cover your overdraft without penalty, up to the limitations or conditions spelled out in your agreement.

What the bank may not fully explain, however, is that overdraft protection is considered a line of credit. Adding overdraft protection to your checking account may result in a hard inquiry on your credit report, which may initially drop your credit score. If there are any issues later on and the bank decides that overdraft protection has been abused or your account has been closed with an outstanding balance, that line of credit may be subject to reporting to the credit bureaus.

Again, if the default results in the bank bringing in a collection agency, you can be sure they will report the issue to the credit bureaus.

How can you avoid any negative credit consequences when closing a checking account?

Quite simply, make sure your account is in good standing when it is closed. Try not to hop around opening and closing bank accounts over and over again if you can help it. Finally, while there is nothing wrong with using overdraft protection on your bank account, understand overdraft protection’s credit implications before assuming that it is simply a free perk on the account.

If you would like help with credit repair, contact Lexington Law today. Or, continue exploring our blog where we have published reams of financial information for people in all walks of life.

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Credit cards can play a major part in determining the status of your credit reports and credit score—the key stepping stones to obtaining the best financial opportunities society has to offer. As technology evolves, credit cards are evolving too, and to maximize their benefits, you’ll want to stay on top of the changes.

Increasing payment variety

Physical credit cards, although helpful when trying to build credit, are starting to lose the popularity game to different payment methods like Apple Pay, PayPal, Venmo, and virtual credit cards. These payment methods are constantly advancing and are expected to gain even more popularity in the future. Although a potential decrease in credit card usage may seem surprising, the world has already seen a different form of payment lose its frequency: cash. Due to the development of credit cards, debit cards, and digital payments, cash transactions became less popular. So, what does this mean for physical credit cards? Growing payment variety may cause credit card usage to drop until physical credit cards will no longer be a reality. On the other hand, credit cards have adapted in the past, which has led consumers to use them regardless of technological advancements. Although credit cards may be fighting a losing battle in comparison to newer forms of payment, credit cards are still valuable as they are directly correlated with credit reports and credit scores. A person’s credit score cannot be influenced (yet) by online/mobile/app payments. In order to continue getting certain rewards, opportunities, loans, etc., the public has to continue using credit cards on a regular basis. Until another form of payment evolves to influence credit, credit cards will still play an important part in society’s future.

Security risks and advancements

Although credit card security has improved over the past couple of years with the implementation of around-the-clock credit monitoring and fraud alerts as well as identity protection services, credit card identity theft is still a constant threat. Physical credit cards are at-risk more so than virtual credit cards and mobile payments because credit cards and credit card numbers can be physically stolen. People who regularly use credit cards usually carry them in a purse or wallet and use them to make in-store purchases. If they are not careful, thieves can easily steal the card or write down the number when the card owner is using the card to make an in-store purchase. Criminals can also steal a credit card number if the card owner swipes the card at an unsecured location or if the card owner makes a purchase online on an unsecured website. Credit card thieves can use credit card skimmers to steal credit card information. Thieves can also use malware to obtain credit card information off of a personal device or computer. While the future of credit card security looks bright as new technology and security measures are being developed, other forms of payment may continue to prove more secure regardless of future credit card security.

Current credit card usage

Credit cards are designed to be influential forms of payment. For instance, having a good credit score along with clean credit reports can help you buy a car, purchase a home, get better interest rates, earn rewards, get approved for loans, or land a dream job. Bad credit, although devastating, can be fixed via credit repair and the sensible use of a credit card. The world will continue to use credit cards for those very reasons until there is a significant change that forces credit cards out of the picture. Because credit cards have been used for years on end and have evolved throughout time, there is not yet substantial evidence that proves credit cards will be obsolete in the near future.

Learn how you can start repairing your credit here, and carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.